How it works
How a retirement paycheck plan works
Turning savings into monthly income takes more than a portfolio. Here is the approach, step by step.
Why timing matters
The order of returns matters as much as the returns.
Two retirees get the same returns over twenty years, in a different order, and take out the same amount each year. The one who meets the bad years first can end up with far less.
Hypothetical illustration. The same twenty yearly returns in opposite order, with the same yearly withdrawal. Not based on any Clockwise portfolio or actual returns. Ignores fees and taxes.
How the plan is built
Three buckets. One paycheck plan.
Your savings are split by job, so the money you need soon is not riding on this year’s market.
- Each month, withdrawals in your paycheck plan come from the Now bucket.
- A down year hits the Later bucket. Nothing in it is sold to pay you, and withdrawals keep coming from Now.
- When markets recover, gains refill Next, and Next refills Now.
Now
Income
About three years of planned income, held in steadier investments. Your monthly withdrawals come from here.
CoversYears 1 to 3
Next
Inflation protection
The following three years, positioned to keep pace with rising costs. It refills the Now bucket.
CoversYears 4 to 6
Later
Growth
Money you will not need for years, invested for the long run. It refills the buckets ahead of it.
CoversYear 7 on
Illustrative description of a bucket-based income approach. Bucket levels are not to scale and do not represent any client plan. Not an annuity or a guarantee of income. Investing involves risk, including loss of principal.
What happens in a down year
1 · Markets fall
The Later bucket drops in value
Growth investments go down with the market. Nothing in that bucket is sold to pay you.
2 · Withdrawals continue
Income comes from the Now bucket
Monthly withdrawals in your paycheck plan come from money set aside for them.
3 · Markets recover
Gains refill the buckets ahead
When growth comes back, it tops up Next, and Next tops up Now.
From first score to your paycheck plan
Get your score
Eight questions, about 5 minutes, no cost.
Meet your advisor
A fiduciary advisor walks through your score with you.
Your paycheck plan
How much to draw each month, and from which bucket.
Monthly withdrawals begin
Paid to your bank account on a schedule you choose.
Reviews as markets move
Your advisor checks the buckets and refills them when it makes sense.
What you get
A written monthly income plan
A bucket stress test across several market paths
A monthly portfolio report
An optional view of all your accounts in one place
Regular reviews with your advisor
A fiduciary on your side
What a paycheck plan is not
Not an annuity
Your money stays invested in your own accounts. You can see it and reach it.
Not a promise of returns
Investments can lose value. The plan is built to manage that risk, not remove it.
Not set and forget
Your advisor reviews the plan as markets and your life change.
Questions about the plan
How much of my savings goes in each bucket?
It depends on how much income you need and when. As a starting point, the Now bucket holds about three years of planned income and the Next bucket the three years after that. Your advisor sets the exact amounts with you.
How are withdrawals from my paycheck plan paid?
Withdrawals are scheduled from the Now bucket into your bank account. Your advisor sets the amount and timing with you.
What if I need money for something big?
Tell your advisor. Large expenses are planned from the bucket that fits the timing, so your monthly income is not disturbed.
Is a paycheck plan an annuity?
No. Your money stays invested in your own accounts, and your income comes from planned withdrawals. Because it stays invested, it can change with markets, and your advisor reviews the plan with you as they do.